Bodrum is one of the destinations served by the collapsed Goldtrail. Photograph: Robert Landau/Corbis

The holiday plans of tens of thousands of people have been wrecked after the collapse of a travel operator. The Civil Aviation Authority (CAA), the industry regulator, confirmed that Goldtrail Travel, which specialises in low-cost holidays to Greece and Turkey, had gone into administration, leaving an estimated 16,000 people overseas.

Goldtrail was a medium-sized independent operator with around 150,000 customers. An estimated 2,000 people from the UK were due to travel with the budget holiday company this weekend. It is thought that as many as 50,000 holidaymakers who have booked flights over the summer will be affected.

Hundreds headed for airports yesterday unaware that Goldtrail had bust. A group supposed to be flying out of Glasgow were forced to retrieve their bags after having checked them in during the early hours of Saturday morning.

Mark McLay, one of 180 people due to fly to Marmaris, Turkey, said that travellers were told over a public address system that the company had gone into administration, they would not be flying and would be escorted from the building. He said they were met by police at the departure gate and told to hand back any duty free goods they had purchased.

"There was no anger, but I saw one woman crying and it was bad for the families there," he added. "Why they could not have told us earlier is beyond me and it was heartbreaking to see all the families looking so completely gutted."

Goldtrail agents in Turkey have warned hotel managers they will not receive any compensation from the company and suggested they should recoup their losses directly from the tourists. Norma Sharland, who is staying at the Villa Sol in Armutalan, Marmaris, said the hotel was already demanding that their British clientele pay up.

"They told us we would have to pay £25 per room per night. Why should we, when we've already paid? We only booked our holiday two weeks ago and paid £1,000 for it then. You're not telling me they didn't have an inkling Goldtrail was in trouble two weeks ago."

Christopher Dabner, 19, and girlfriend Elizabeth McQuilkin, 18, were due to leave last night but had been presented with an unexpected bill for accommodation they had already paid for.

"I'm stunned," he said. "It's the last day of our holiday, we've spent all our money, and now they're asking for another £150. When I checked my receipt from Goldtrail the hotel was only £102 in the first place – I can't believe that they're trying to profit out of this misery."

The CAA said it was making arrangements to fly customers home at the end of their holidays under its Air Travel Organiser's Licensing scheme. Flights from Turkey and Greece will operate as normal today and tomorrow, the CAA said, while further information about flights due to take off on Tuesday will be posted online. However, holidaymakers in Greece were warned to expect changes to flights and are advised to check with representatives at local airports.

Aviation expert Julian Bray said: "Customers who have paid more than £100 of the total invoice price by credit, not debit, card may be in a better position to recover some monies paid to Goldtrail, otherwise they will be subject to the administration process and could wait two years or more for a payment under travel industry bonding arrangements."

Goldtrail, based in New Malden, Surrey, opened in 1996, specialising in cheap holidays to Turkey before branching out into Greece. There had been rumours for several months that it was struggling. On the Travelweekly website yesterday, a travel agent said he told staff to stop selling Goldtrail holidays last year. "I was not prepared to put my clients at risk, this was on the cards," he wrote. "Rubbish service and, quite often, way too cheap prices. When will we ever learn?"

In a BBC Watchdog report last year Goldtrail was accused of putting customers up in sub-standard hotels and featured people who said they were given accommodation which had no curtains on the bedroom windows, stained mattresses and filthy restaurants.

The firm told holidaymakers who complained they "shouldn't expect too much from a cheap holiday" and described Turkey as a "third world country with lower standards". Its website yesterday announced that the company ceased trading on Friday and directed customers to the CAA.